> However, a former Apple employee said it was possible the encryption project was dropped for other reasons, such as concern that more customers would find themselves locked out of their data more often. Sounds more plausible to me. Most of Apples customers are normal end-users, I can see how loosing access is worse for them as compared to data being available for a search warrant. I suspect "risk of loosing the key…
This was a massive PR hit for Apple that continues to this day.
My guess is that they saw encrypted backups as a solution to the leak problem, but the FBI has long used iOS backups as a back door into increasingly difficult and expensive to crack iPhones. Phone analysis is the #1 most common investigative tool for federal (and now, all) law enforcement, so turning off a major tool likely required intervention at the highest levels of government.
Big brother does not like losing their spying abilities.